BKL fintech partner and cryptocurrency accounting specialist Jon Wedge has contributed to Accounting Technician Magazine’s article on a central bank digital currency (CBDC) or digital pound.
Accounting Technician Magazine is published by the Association of Accounting Technicians (AAT). The article, Accounting for Crypto, appeared in the March/April 2022 issue and was written by Neil Johnson.
Jon Wedge, a partner at BKL, sees the scope for greater transparency and efficiencies around tax. Wholesale and B2B transactions could be taxed at source, immediately deducted, and paid to HMRC – the same for PAYE.
“You could argue this is a good or a bad thing. It may give the Government too much control over what we’re doing, but it could also facilitate correct tax policy enforcement and prevent people breaking rules and laws. I like the fact that, in theory, the technology should allow for the traceability of tax spending; however, should the Government wish to give us that transparency and level of information is another question.”
Wedge also sees a CBDC making sense where institutions are moving large amounts of money or borrowing from each other.
“If you can capture all the data live, in theory it would be great for monetary policy setting, because you’d know exactly at any point in time where money’s going, which industries are investing.”
While blockchain is, in theory, an immutable, single source of the truth, databases can still be prone to corruption and manipulation, says Wedge. “If you look at blockchain in its purest form, say with bitcoin, the ledger is completely open – anyone can get a copy of it. If a CBDC was operating on DLT, you wouldn’t necessarily want everyone in the whole world knowing what’s going in and out of individual accounts.”
The full article is available to read here.
BKL’s tax specialists are able to advise clearly and accurately on the tax implications of buying and selling cryptocurrencies, mining cryptocurrencies, arbitraging exchanges and margin trading as well as transferring back into ‘fiat currencies’ and ensure that all disclosures are made precisely and promptly to HMRC. This will provide peace of mind and the assurance that you are complying fully with the law.
You can find out more on our cryptocurrency accounting and tax page or contact us using our enquiry form.